Administrative monetary penalty on First Nations Bank of Canada

[2025-10-16]

First Nations Bank of Canada, also operating as FNBC, a bank headquartered in Saskatoon, Saskatchewan, was imposed an administrative monetary penalty of $601,139.80 on September 22, 2025, for committing 5 violations. The violations were found during the course of a compliance examination. The administrative monetary penalty has been paid in full and the case is closed.

Nature of violation

Violation #1

Failure to report financial transactions that occurred in the course of its activities and in respect of which there are reasonable grounds to suspect that the transactions related to the commission or attempted commission of a money laundering or terrorist activity financing offence – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, section 7 and the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transactions Reporting Regulations, section 9(1)

First Nations Bank of Canada (the Bank) failed to submit suspicious transaction reports in 31% of the case files reviewed by FINTRAC, where there were reasonable grounds to suspect that one or more transactions were related to the commission or attempted commission of a money laundering or terrorist activity financing offence. FINTRAC's examination revealed gaps in the Bank’s application of its unusual transaction review processes.

In each of the instances, the Bank failed to report suspicious transactions conducted by clients. Specifically, the Bank did not consider:

• Transactional activity that was inconsistent with the client's financial standing.
• Transfers, deposits or payments to or from unrelated parties (foreign or domestic), where the client appears to be or states they are acting on behalf of another party or involving an account linked to seemingly unconnected parties.
• Evidence of untruthfulness on behalf of the client (e.g., providing false or misleading information) when the branch inquired about the source of funds.
• The client appears to be structuring transaction amounts to avoid client identification or reporting thresholds.

The Bank subsequently submitted suspicious transaction reports to FINTRAC after FINTRAC discovery.

Violation #1 is classified by regulations as a Very Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #2

Failure to develop and apply written compliance policies and procedures that are kept up to date, and, in the case of an entity, are approved by a senior officer – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.6(1) the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(b)

FINTRAC determined that the Bank’s written compliance policies and procedures were inadequate, resulting in procedural gaps that require enhancements. The policies and procedures identified as inadequate are as follows:

• Verifying client identity and applying appropriate know your client (KYC) procedures.
• Reviewing and assessing unusual transactions for reporting.
• Applying the reasonable grounds to suspect threshold for suspicious transaction reporting.
• Documenting and applying policies and procedures on triaging high-risk alerts and Production Orders. 

Violation #2 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #3

Failure to assess and document the risk referred to in subsection 9.6(2) of the Act, taking into consideration the prescribed factors – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(c)

During the examination, FINTRAC determined that the Bank failed to institute an appropriate customer-based risk assessment that has a holistic view of its clients, including high-risk clients. While the Bank created a ranking scale of risk thresholds, FINTRAC’s review found that it did not have documented policies on how to manage clients of different risk categories. When the Bank fails to appropriately identify areas and levels of money laundering or terrorist activity financing risk, and document its rationale reached in the risk assessment, it prevents the Bank from applying effective mitigation measures. As a result, clients, including high-risk clients, may not be effectively identified and managed.

Violation #3 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #4

Failure to take prescribed special measures – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.6(3) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 157

FINTRAC’s examination determined that the Bank failed to apply its own policies and procedures with respect to high-risk clients. In 6 instances of the sample reviewed, the clients were not subject to any special measures prescribed by the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations. While the Bank conducted transaction monitoring based on alerts triggered by the clients’ account activity, FINTRAC did not observe ongoing monitoring for high-risk clients commensurate with their risk level.

Violation #4 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #5

Failure to conduct ongoing monitoring – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 123.1

FINTRAC’s examination determined 5 instances where the Bank failed to assess clients’ risk ratings or keep client information up to date, contrary to its own anti-money laundering and anti-terrorist activity financing policy.

Violation #5 is classified by regulations as a Minor violation. The imposed penalty takes into account the criteria in section 73.11 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Related link

• News Release : FINTRAC imposes an administrative monetary penalty on First Nations Bank of Canada